IRA, or Individual Retirement accounts are important vehicles so that you can save for retirement. If you have an IRA or plan to start one soon, there are some rules key year-end you should know. Here are the best reminders of the IRS about IRA year-end:
Learn about the IRA contribution and deduction limits
Learn about the contribution and deduction limits. You can contribute up to a maximum of $5,500 ($6,500 if you are 50 years or older) to a traditional IRA or Roth. If you are filing a joint return, you and your spouse can each contribute to an IRA account even if only one of you has taxable compensation. You have until April 18, 2016 to make an IRA contribution from 2015. In some cases, it may have to reduce your deduction for your traditional IRA contributions. This rule applies if you or your spouse has a retirement plan at work and your income is above a certain level.
Avoid excess IRA contributions
Avoid excess contributions. If it contributes more than the limits of the IRA for the year 2015, you are subject to a tax of six percent on the amount in excess. The tax applies each year while in excess quantities are maintained in your account. You can avoid the tax if you withdraw the contribution in excess of your account on the due date of your return for the year 2015 (including extensions).
Take required IRA distributions
Take required distributions. If you have at least 70½, age, should take a minimum distribution required, or RMD, from their own traditional IRA. You are not required to take an RMD from your Roth IRA account. You should normally take their RMD on December 31, 2015. If you turned 70½ in the 2015 deadline is 1 April 2016… If you have more than one IRA traditional, calculate the RMD separately for each IRA. However, you can withdraw the total amount from one or more of them. If you do not take your RMD full-time faces 50 per cent of the consumption tax on the amount of RMD that you did not drop.
IRA distributions may affect your premium tax credit (PTC)
IRA distributions may affect your premium tax credit (PTC). If you take a distribution from your IRA at the end of the year and hopes to claim PTC, you must be careful regarding the amount of the distribution. Taxable distributions increase their family income, and the PTC can be eliminated. You will lose eligibility if your household income for the year increased more than 400 percent of federal poverty for their family size. In this case, you must pay the total amount of the payments of the tax credit’s cousin who became his provider of health insurance in his name.
Rights in Dealing with IRS
Every taxpayer has a number of fundamental rights which should be taken into account when dealing with the IRS. These are the rights of the taxpayer. Explore your rights and our obligations to protect it at IRS.gov.